Mereo Biopharma Share Discussion Threads

[pingi] 23/11/2006 10:18

momentos - 23 Nov'06 - 09:23 - 2166 of 2169
Anyway Moda's US turnover is not supposed to replace YSL UK Turnover.

eh?

YSL was pervasive on the high street. You can't replicate that overnight and without spending a lot. When my little brother has heard of Ungaro then I will now they are getting there.

As for the Moda deal, I suspect it will get messy.

[momentos] 23/11/2006 10:00

L2 anyone?

Plus spread showing at 118 -122.

[momentos] 23/11/2006 09:49

And the Okaidi deal really should not be underestimated. They are not purely a retailer.

They only sell good that they make themselves. They have 520 shops and a turnover of Euro 350m. The stuff is quality - sit mid to upper market in France and are VERY successful.

[dan de lion] 23/11/2006 09:34

From the interims:-

The Ungaro brands are now in 754 stores in the USA. JCC has penetrated 79 stores in its first US season.

[momentos] 23/11/2006 09:23

Anyway Moda's US turnover is not supposed to replace YSL UK Turnover. The Moda deal had two elements

1. Access to US market: turn existing Moda operation profitable due to economies and facilitate JCC distribution in US.

2. Get the Ungaro Homme license to use as brand to replace YSL in the UK (license also exists for other territories)

Further brand acquisitions will leverage more profit from their efficient sourcing and distribution base.

[momentos] 23/11/2006 09:19

"I believe Moda is consuming a lot of cash and not making up the profit shortfall that will arise come the end of YSL."

You still have not clarified Pigni. Why is it "consuming cash"? I see no evidence of a large increase in working capital and it is borderline profitable (Jan to MAr pbt 336k, Mar-Sep pbt -110k). It should turn cash generative as efficiencies are implemented.

The only substantial cash it is likely to consume is the purchase price, which they have indicated they hopely will make a 400k saving.

The caveat to this is that the 2006 annual report said:

"Turnover of Moda America LLC for the period from acquisition to 31 March 2006 was £2,551,000 and the profit before tax was £336,000. For the period between 1 April 2005 and the acquisition date, Moda had sales of £6,692,000, and
losses before tax of £4,253,000."

BUT it is quite likely the 4.2m loss is due to a large value of exceptionals - goodwill / asset writedowns before the purchase. The 19 Aug 2005 Acquisition RNS said this:

"For the year ended 31 December 2004, Moda reported net
turnover of US$ 17.8 million (#10.0 million) (2003: US$12.2 million, #7.0
million) with a loss before tax of US$ 198,000 (#113,000) (2003: US$1.7 million
loss, #971,000). The gross assets of Moda at 31 December 2004 were US$ 6.4
million (#3.7 million) (2003: US$5.0 million, #2.9 million)."

NOTE the previous losses of USD 198k and USD 113K.

[pingi] 23/11/2006 08:44

Last time I *ignored* IC advice I sold RAB @ 112 while they said buy!

[alastairtodd] 23/11/2006 08:39

IC article - kiss of death. LOL

[pingi] 23/11/2006 08:33

remynapoleon - I thought I had been quite clear.

I believe Moda is consuming a lot of cash and not making up the profit shortfall that will arise come the end of YSL.

Given that, if I were still a holder, I would want management effort to be directed to getting Moda generating profits, on the YSL scale, ... not chasing headline grabbing acq.'s for turnover growth.

[cosnova] 22/11/2006 21:48

I agree with Lex, mm's happy to take the shares,

more then likely a large order in the back ground being filled.

[remynapoleon] 22/11/2006 20:21

pingi

Re post 2157

Can you please elucidate?

remynapoleon

[lex1000] 22/11/2006 20:13

Note mickey makers continue to soak up sells both here and PLUS today as they did on Monday.Seemingly happy to do so all the way up from recent rise from 100p-122p highs.A few "B" trades of late.Broker/mickey maker SCAP should know the score including dodgy friday RNS "signature to". All's fair in love and war. A few tricks and games to be expected along the way.Price firm @ 118p/119p.aimvho.

[pingi] 22/11/2006 16:34

Effort would be best spent getting Moda on track... not in yet another acq.

I think it is consuming a lot of cash and not making up the profit shortfall that will arise come the end of YSL.

[momentos] 22/11/2006 16:26

Yep, who knows - Pringle, Hackett (unlikely), Daks (unlikely).

They have said UK acquisition. Strategically manufacture or distribution are unlikely to be the focus, as they don't need this. Cant see them going down the rocky road of retail either.

So you would perhaps expect it to be a brand. It is not a license as MM said they would acquire a UK business (that is unless it is a business holding a licence). The names above are firms I've found with about 20m turnover not in the best of shape who might be up for sale.

But it could be anyone - maybe Blue Inc, the clothes chain formally known as Mister Byrite!


"...The London-based firm is in talks to acquire a business in the UK at the beginning of next year. "The only area we have not started to push is the UK and next year we are going to start," he said, adding that the acquisition target was already "doing quite a large turnover".... "

[wbjunior] 22/11/2006 16:10

Yep you may be right , just royalties, be nice to know what % that is, but as always commercially sensitive like the brand split.
Pringle would be good , actually anything with a solid 20 million a year turnover would be great, we would have a good chance of earnings growth in 2008 then...........wbj

[momentos] 22/11/2006 16:01

'Under the terms of the licence, initially for three years, JCC will receive
royalties on all retail sales. Additionally, the licence is safeguarded by
minimum guarantees and promotional spend.

Under the contract, Marchpole's JCC operation in Paris will design, produce and
sell children's clothes under the JCC brand name ("Jean-Charles de Castelbajac
for Okaidi"). '

"Produce" is a difficult word.... I would have thought Okaidi would do the manufacturing.

[wbjunior] 22/11/2006 15:21

Thanks momentos buy I think we are designing and manufacturing the complete range so there must be something fairly substantial in it for all that trouble..........wbj
Ps Not much action today hope it picks up soon when Mags are out

[momentos] 22/11/2006 14:48

Pringle, a possibility?!

wbj - there are lots of Okaidi's and they are expanding rapidly. Sales should be good, but JCC cut is design / royalty percentage only. NOt sure what it will amount to.

[dan de lion] 22/11/2006 13:32

The final consideration is subject to agreement with the vendor in respect
of a set of completion accounts. Negotiations remain ongoing.

[momentos] 22/11/2006 12:03

HOw about Daks Simpson as a potential purchase?

Turnover about 20m, losing money, existing Onward K (Japan) link.....

DYOR and if you find anything let me know!

[pingi] 22/11/2006 11:34

wbjunior - I thought everybody had worked it out and I was playing catchup?

I'm pretty sure momentos has.